Sen. Dianne Feinstein, D-Calif., and Sen. Jeff Sessions, R-Ala., introduced a bill Thursday to allow victims to seek restitution when a defendant convicted of a crime dies before his appeals have been completed.

Photo: PAUL SAKUMA, AP

Sen. Dianne Feinstein, D-Calif., and Sen. Jeff Sessions, R-Ala.,...

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Sen. Jeff Sessions and Sen. Dianne Feinstein's bill would stipulate that a defendant's conviction cannot be vacated just because the person has died.

WASHINGTON — In the wake of a federal judge's decision vacating the late Ken Lay's fraud and conspiracy convictions, two senators introduced a bill Thursday to allow victims to seek restitution when a defendant convicted of a crime dies before his appeals have been completed.

The same day the Justice Department filed notice it will appeal U.S. District Judge Sim Lake's decision to clear Lay's name "in light of pending legislation."

Last month, Lake wiped out the one-time Enron Corp. chairman's convictions because Lay died before the appeals process had been completed.

In reaching that decision, Lake was following a precedent set in the New Orleans-based 5th U.S. Circuit Court of Appeals — the same court that will hear the government's challenge.

The 5th Circuit is unlikely to side with the Justice Department because that court set the precedent Lake followed, said Brian Wice, a Houston attorney who specializes in appeals issues. But the government needs to appeal to that court before it can appeal to the U.S. Supreme Court, he said.

Earlier this month, a three-judge 5th Circuit panel already refused to order Lake to reverse his decision. The panel reiterated Lake's position that legal precedent says that "when a defendant who has been found guilty of a federal crime dies before exhaustion of his appeal, his prosecution must be abated, his conviction vacated and his indictment dismissed."

The ruling responded to an appeal of Lake's decision by an Enron shareholder.

Representatives of the Lay family couldn't be reached for comment Thursday evening.

"We need to ensure that, in these types of cases, hard-won convictions are preserved and restitution remains available for the victims of crime," Feinstein said in a statement Thursday.

When convicted, a criminal defendant can be ordered to pay restitution to his victims, to try to make them whole. But since Lay's conviction was vacated, his estate cannot be ordered to pay restitution.

Instead, the Justice Department was forced to file a civil suit seeking to wrest control of $12.7 million worth of assets. If the government is successful, it could then turn over some or all of those proceeds to victims of the Enron debacle.

The Justice Department proposed legislation last summer that sought to preserve such convictions after a defendant dies pending sentencing and appeal — and wanted it to be retroactive to July 1, four days before Lay died. That proposal never garnered a sponsor.